Uruguay has a solid democratic tradition, marked by political and social stability, a high literacy rate, a large urban middle class that reflects a relatively even wealth distribution, and an advanced social security system.
According to the World Bank’ Opportunity Index, Uruguay has a high level of equality in terms of access to basic services such as education, potable water, electricity, and sanitation.
In July 2013, the World Bank ranked Uruguay as a high-income country with a gross national income per capita of $13,580. With average annual growth of 5.5% between 2006 and 2013, Uruguay’s strong economic performance has enabled it to consolidate structural improvements made since the crisis of 2002. These improvements helped Uruguay withstand external shocks, such as the international crisis of 2008-2009. Despite its negative effects and global uncertainty, the annual economic growth rate was 4.4% in 2013. A slowdown in growth at around 3% is expected for 2014. The second quarter shows growth of 3.7% (YOY) and 2% from the first quarter.
The good macroeconomic performance was reflected in the labor market, which recorded historically low unemployment levels in 2013 (6.3 %). Moreover, thanks to the vigorous economic expansion and the social policies implemented, there has been substantial progress in poverty reduction, which went from 39.9% in 2004 to 11.5% in 2013, while extreme poverty reduced from 4.7% in 2004 to 0.5% in 2013. The country, however, needs to ensure that people who managed to exit poverty are not forced back again, while working on specific strategies to strengthen this vulnerable group.
Export markets have diversified in order to reduce de dependency on the country’s main trade partners (in 2000 Uruguay placed 80% of its sales in 14 markets, while in 2012 the same percentage went to 19 destinations). At the same time, Uruguay has maintained its decreasing trend in public debt -GDP ratio – from 100% in 2003 to 60% by 2014. It has also managed to decrease the cost of its debt, reduce dollarization - from 80% en 2002 to 50% en 2014 - and extend the maturity profile of its financial commitments - Uruguay has issued, among other debts, global bonds expiring in 2022, 2024, 2036, 2045 and 2050.
Notwithstanding the significant progress in debt reduction, debt remains at relatively high levels, and although Uruguay has made progress in trade diversification, its regional partners, especially Brazil, account for a major share of exports (20%), which is a factor of vulnerability.
Another factor to be taken into account are inflationary pressures arising from the strong internal demand and the rise in the price of commodities, which the government is seeking to fight through different economic and fiscal policy tools.
A priority for the country is to achieve higher investment levels and improve the competitiveness of its economy, especially with respect to productive capacity and infrastructure.
The Price Consumption Index has remained consistent in the last 4 years above the target range set by the Central Bank between 3-7% and has reached close to 10% in recent months.
Economic experts cite external competitiveness as another challenge to consider, but in 2014 there has been an improvement in the real effective exchange rate, which is at its best for the last 4 years.
A priority for the country is to obtain higher levels of investment and improve the competitiveness of its economy.
For more data on Uruguay, go to World Bank's Open Data site.
Last Updated: Oct 09, 2014